Morning Preview: April 02, 2019

Auto PostDaily Market Report

Early Look

Tuesday, April 2, 2019

Futures

Up/Down

%

Last

DJ Industrials

7.00

0.03%

26,265

S&P 500

0.50

0.03%

2,871

Nasdaq

0.00

0.00%

7,498

 

 

Stock futures in the U.S. are pointing to a flattish open as major averages in Asia were mixed to mostly higher and European markets are also up slightly. In Asian markets, The Nikkei Index dipped -3 points to 21,505, the Shanghai Index gained 6 points to settle at 3,176 and the Hang Seng Index rose 62 points to 29,624. In Europe, the German DAX is up around 20 points to 11,700, while the FTSE 100 is up over 40 points at 7,360. Bitcoin grabbing headlines for the first time in months, with prices topping over $5,000, the highest level since November before paring gains (last up over 15% to $4,750), while other crypto currencies such as Ethereum and Ripple are also moving higher. Regarding data today, investors get monthly auto sales for March with expectations to decline for a third straight month, while monthly durable goods orders are also expected. Markets still await details from another trade meeting in Washington tomorrow between China and the U.S., and await the monthly jobs report which is expected at the end of the week. Earnings are quiet again this week with only a handful of companies reporting before earnings season starts in a bout 2-weeks.

 

With yesterday’s gains, the Dow Industrials topped the 26,000 level, the S&P 500 jumped 1.2% to the highest level since October while the NASDAQ was higher by 1.3% to move back above the 7,800 level as stocks advanced after strong manufacturing data out of China helped alleviate investor concerns over slowing global growth. Financial shares led the advance as Treasury yield surged (10-year yield up over 9 bps to around 2.5%), while energy stocks gained as WTI crude touched its best level in 5-months. Eight of 11 main S&P 500 sectors higher, with the defensive staples, utilities and REITs lagging. Fear continues to abate as the CBOE Volatility index (VIX) fell for the fifth day in six, down 2.3% to 13.4.

 

Market Closing Prices Yesterday

·     The S&P 500 Index climbed 32.79 points, or 1.16%, to 2,867.19

·     The Dow Jones Industrial Average rose 329.74 points, or 1.27%, to 26,258.42

·     The Nasdaq Composite gained 99.59 points, or 1.29%, to 7,828.91

·     The Russell 2000 Index advanced 16.33 points, or 1.06% to 1,556.06

 

Events Calendar for Today

·     7:45 AM EST      ICSC Weekly Retail Sales

·     8:30 AM EST      Durable Goods Orders, Feb-P…est. (-1.8%)

·     8:30 AM EST      Durable goods Ex: Transportation, Feb-P…est. 0.1%

·     8:55 AM EST      Johnson/Redbook Weekly Sales

·     4:30 PM EST       API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: ANGO, LW, WBA

·     Earnings After the Close: GME, PLAY

 

Other Key Events:

·     Monthly auto sales for March

·     American Association for Cancer Research (AACR) Annual meeting, 3/29, 4/3, in Atlanta, GA

 

 

Macro

Up/Down

Last

WTI Crude

0.55

62.14

Brent

0.32

69.33

Gold

-2.00

1,292.20

EUR/USD

-0.001

1.1203

JPY/USD

-0.01

111.34

10-Year Note

-0.023

2.478%

 

 

World News

·     The United States government is considering additional sanctions against Iran that would target areas of its economy that have not been hit before, a senior Trump administration official told Reuters. The official said the administration was aiming to follow through with the new sanctions around the anniversary of the U.S. withdrawal from a 2015 nuclear deal between Iran and several world powers, which President Donald Trump announced last May.

·     Australia’s central bank held its ground as the Reserve Bank of Australia (RBA) left the cash rate at 1.5%, as widely expected by markets and economists.

 

Sector News Breakdown

Consumer

·     Care.com (CRCM) was downgraded to Neutral from Buy at BTIG citing the fallout from the WSJ report on the company as the analyst sees “tangible fallout” after learning that Best Buy (BBY) has suspended its back-up care offering provided by Care.com’s Care@Work unit.

·     Lear Corporation (LEA) has agreed to acquire Seattle-based Xevo Inc., an automotive software supplier, for $320M

·     Lyft (LYFT) initiated with a Sell rating, $42 price target at Seaport Global (recent IPO priced at $72)

·     Wingstop (WING) downgraded to Neutral from Buy at Guggenheim

·     Kforce (KFRC) increases share buy-back authorization to $150M

 

Energy, Industrials & Materials

·     DowDuPont (DWDP) announced that it has completed the separation of its Materials Science Division through the spin-off of Dow Inc. Dow begins “regular way” trading tomorrow on the NYSE under the symbol “DOW.”

·     UGI Corp. (UGI) said it will buy the 69.2 million shares of propane marketer AmeriGas Partners (APU) that it doesn’t already own for the equivalent of $2.44B in cash and stock. Under terms of the deal, UGI will exchange 0.50 of its shares plus $7.63 in cash for each of APU shares. Based on Monday’s closing prices, that values AmeriGas shares at $35.325 https://on.mktw.net/2FR32Th

·     DTE Energy (DTE) files automatic mixed securities shelf

·     Exxon Mobil (XOM) has held talks with Nigerian companies about the potential sale of its stakes in onshore and offshore oil and gas fields in Nigeria, Reuters reports

·     Singapore Air grounded two Boeing (BA) 787s after finding “premature blade deterioration” during routine inspections of some engines. In another story, Boeing needs more time to assess software changes for the 737 Max. The company had intended to present the FAA with the software for approval by last week, but it said yesterday the update won’t be ready until the coming weeks, according to Bloomberg

·     Alcoa (AA) downgraded to neutral from outperform and tgt cut to $31 from $40 at Credit Suisse

·     BHP (BHP) has become the second major miner to lower its iron ore production estimates following a cyclone off the coast of Western Australia. 

·     PG&E (PCG) further extended the shareholder proposal deadline, including the nomination of any person to the board, by one day.

·     Vitol, the world’s largest independent energy trader, has signed a preliminary liquefied natural gas supply agreement with Russia’s Novatek – Bloomberg

·     House Committee on Transportation and Infrastructure sends letters to FAA, Boeing (BA) requesting records relating to certification of the 737 Max aircraft

 

Financials

·     Ally Financial (ALLY) announces $1.25B share repurchase program

·     EVO Payments (EVOP) files to sell 5M shares of class A stock

·     STAG Industrial (STAG) 6.5M share Spot Secondary priced at $29.25

 

Healthcare

·     Apyx Medical Corp. (APYX) shares fell -35% as announced it has voluntarily withdrawn its application for premarket notification 510(k) regulatory clearance of J-Plasma/Renuvion for use in dermal resurfacing procedures/FDA raised questions and concerns related to superior clinical results from one investigational center as compared to the other two investigational centers

·     Evoke Pharma (EVOK) shares fell -39% as has received a Complete Response Letter (CRL) from the FDA for its 505(b)(2) NDA for Gimoti for the relief of symptoms associated with acute and recurrent diabetic gastroparesis

·     Watch shares of UNH, CI, HUM, AET as CMS raises final Medicare advantage rate increase to 2.53% from proposed increase of 1.59% as per Reuters – recall earlier, Bloomberg noted Wall Street analysts expect the finalized rate to be revised higher, with Leerink noting it has gone up in six of the last seven years

·     AVEO Oncology (AVEO) and Biodesix, Inc. announced results from an investigator-sponsored Phase Ib expansion cohort of ficlatuzumab, AVEO’s potent hepatocyte growth factor (HGF) inhibitory antibody product candidate, in combination with cytarabine in patients with relapsed and refractory acute myeloid leukemia (AML)

·     Ra Pharmaceuticals, Inc. (RARX) announced that data from its Phase 2 clinical trial of zilucoplan for the treatment of generalized myasthenia gravis have been selected for an Emerging Science dual oral and poster presentation at the AANA

·     Tricida (TCDA) files to sell 5M shares of common stock

 

Technology, Media & Telecom

·     Qorvo (QRVO) upgraded to Buy from Neutral at Goldman Sachs and raised price target to $79 from $66 while KeyBanc upgraded to overweight from sector weight with an $85 tgt

·     Bilibili (BILI) files to sell 10.55M American depositary shares

·     Powerbridge (PBTS) 1.75M share IPO price $5.00

·     Tencent (TCEHY) is tapping the bond markets for $5bn, bolstering its balance sheet according to the Financial Times

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Market commentary provided by Hammerstone Markets, a division The Hammerstone Group, a firm separate from and not affiliated with Regal Securities L.P. Regal Securities L.P. has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.

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